Brewer, legislative leaders announce budget deal

by Mary Jo Pitzl - Apr. 27, 2012 11:52 PMThe Republic | azcentral.com

Gov. Jan Brewer and the Legislature's top Republican leaders announced Friday that they have reached a deal on a state budget for next year that holds the line on most spending while providing modest boosts to education, mental health and public safety.

Their $8.5 billion compromise plan for the budget year that begins July 1 is less than either side had originally wanted to spend and is projected to provide the state with a $250 million surplus.

In a joint statement, Brewer, Senate President Steve Pierce and House Speaker Andy Tobin called the fiscal 2013 budget "prudent" while protecting core education, health-care and public-safety programs.

While it puts the state on steady fiscal footing, at least for the coming two years, it projects a $175 million deficit for fiscal 2015.

As details seeped out and lawmakers, lobbyists and interest groups digested the broad outlines, reactions ranged from relief to angst, as various interests saw their pet causes protected or skewered.

The agreement sets the stage for budget votes in the Legislature as early as Monday and an expected rush to adjourn the 2012 legislative session, which began in mid-January.

It's unclear if legislators will adopt the agreement without any major changes. Republicans, who make up the majority, were briefed on the broad outlines of the budget Thursday in small closed-door meetings that allowed them to circumvent Arizona's Open Meeting Law.

However, none of the lawmakers has seen the accompanying policy bills, the proverbial "devil in the details" documents that could swing votes.

The budget agreement represents a compromise between Brewer's $8.96 billion budget, which she proposed in January, and the $8.66 billion plan touted by Republican leaders. After four years of running a deficit, this agreement marks the second successive year that the state would have a balanced budget.

Brewer got money for the health-care, education and public-safety programs that are the beneficiaries of the temporary sales tax she championed two years ago, although not as much as she initially sought.

GOP lawmakers got $450 million set aside in a "rainy-day fund" to cushion against future budget shortfalls but had to spend more than they originally proposed. Much of that money, however, is not coming from general tax revenue, but from fund transfers that fierce weekend lobbying efforts are trying to undo.

For example, the agreement takes $50 million from a $97.7 million mortgage-settlement fund that Arizona won as part of a multistate lawsuit over fraudulent lending practices. The money is intended for foreclosure prevention and to help reverse the negative effects of the housing collapse that hit Arizona.

The budget agreement taps that $50 million to pay for private-prison contracts to provide an extra 500 maximum-security beds.

The plan also takes $12 million over each of the next two years from the state judiciary's automation fund, which is intended to pay for technology to link all the state's courts and connect them with the law-enforcement agencies that feed into the judicial system.

It is unclear where lawmakers and Brewer want to redirect these dollars. The state Supreme Court, which oversees the automation fund, says the move would gut the project.

Arizona's elementary schools get $40 million for a reading-improvement program designed to help students meet a new state standard of reading at grade level by third grade. Brewer wanted $50 million.

It provides $12 million for emergency repairs to the state's K-12 schools, a pittance compared with the backlog of repairs put off since the downturn in state funding four years ago. There is no funding for new-school construction.

It provides $50 million in capital funding for K-12 schools: $35 million makes up for the loss of federal dollars, and $15million is new funding.

Brewer successfully persuaded lawmakers to use state dollars to replace the loss of $42 million in federal dollars for social safety-net programs. Those programs range from child care and cash assistance for poor families to Child Protective Services.

Those dollars are coming from a surplus in the state's long-term-care fund, an accounting switch within the state Department of Economic Security that won't tap state general-taxpayer dollars.

Brewer also won $39 million for the state's program for the seriously mentally ill.

Tim Schmaltz of the Protecting Arizona's Family Coalition called the $39 million one of the bright spots of a budget that he said is generally austere on helping the state's vulnerable.

"That's real money," he said, meaning the dollars will be valuable in providing services to a troubled population.

He also applauded Brewer for persuading lawmakers to find $42 million to compensate for the loss of federal welfare dollars. "The governor really hung in there on this," Schmaltz said.

But it's a one-time fix, meaning the battle will have to start all over again next budget year.

Members of the Arizona Housing Alliance are working to persuade lawmakers to not sign off on the $50 million transfer from the housing settlement.

"We're letting our taxpaying citizens lose their homes so we can have more prisons," complained Val Iverson, who oversees the alliance.

The settlement money is overseen by Attorney General Tom Horne, one of 49 attorneys general who successfully sued over fraudulent lending practices.

"This is something that is being done to us," Horne spokesman Amy Rezzonico said, adding that the office did not proposed the fund transfer.

It's unclear whether the move would be legal: Horne's preliminary assessment was it probably is, but the settlement stipulates it must be used for foreclosure relief.

Other elements of the budget:

$12 million to Medicaid health-care providers.

$3.7 million for a new investigative unit within Child Protective Services. This is one of the recommendations from the governor's CPS review panel.

$15 million to bring the funding allocation for Arizona State University and Northern Arizona University on a par with the University of Arizona. Traditionally, UA has pulled down more state dollars per student than the other two schools.

$6 million for the UA's medical campus in Phoenix.

$80 million over four years to upgrade the state's aging accounting system.